Imagine struggling to keep a control of your debts, with the costs and interest rates going up and up until you can barely meet the monthly installments. How long do you hold on, scrimping and saving, before you throw in the towel?

That is the problem facing Spain, whose Prime Minister Mariano Rajoy is fighting to prevent his country becoming the latest — and biggest — victim of the economic crisis crippling the 17 countries that use the euro and ask for a full-blown government bailout.

The clock is ticking for the country, which is finding fewer and fewer buyers for its debt, sold on the market as bonds. Investors are charging the country increasingly higher rates so that it can borrow the money it needs to keep the economy and public services working.

Investors have taken flight as the uncertainty over whether the country can afford to contain the problems in its banking sector and indebted regional governments continues unabated.

As demand falls for a country's bond, its price falls and the interest rate the country would have to pay to sell it rises.

On the secondary market, where bonds are traded, the interest rate Spain would have to pay on ten-year debt has hovered around seven per cent for weeks. Most market-watchers think borrowing at an interest rate of seven per cent is unaffordable for a country in the longterm. And it's also the pain threshold that eventually compelled Greece, Ireland, and Portugal to request billion-euro bailouts.

The interest rate is "a totem, because it shows a total lack of confidence in the country," says Matteo Cominetta, a European economist at UBS.

"The problem is that rates at that level kill the economy and basically make any growth impossible," he said. "The road is getting narrower and narrower and in the end (Spain) will have to ask for an intervention."

Investors are fretting over whether Spain will be able to repay its loans, and the country could end up being shut out of vital international debt markets. High borrowing costs mean fewer funds for investment, and government austerity policies meant to save money to pay the increased interest rates could choke off growth.

In a bond auction last week, Spain sold €1.04 billion in ten-year bonds at an average interest rate of 6.65 per cent and €1.02 billion in four-year bonds at a rate of 5.97 per cent, up from 5.54 per cent.

Analysts reckon Spain has enough funds to manage its debts until next year. It has already managed to sell off 72 per cent of its targeted €86 billion in medium- and long-term debt for this year.

The Spanish Treasury benefited from two events earlier this year and managed to build up a war chest that would save it from having to go to the bond markets too often and pay over the odds. The first was the ECB's €1 trillion in low-rate loans offered to banks at the end of last year. Spanish banks used the funds from these loans to buy up debt in their country. At the same time, the Treasury front-loaded the start of the year with debt auctions, collecting more than Spain needs to cover its 2012 redemptions, notes Raj Badiani of IHS Global Insight.

"Spain, right now, has some leeway," says Ishaq Siddiqi, an analyst at ETX Capital in London.